Reliance Communications (RCOM) Friday inked a non-binding Term Sheet with Brookfield Infrastructure Group to sell its nationwide tower assets and related infrastructure. As per the agreement, the telco will receive an upfront cash payment of Rs 11,000 crore from the proposed transaction, involving 45,000 mobile towers.
RCom said that it intends to utilize the proceeds of the proposed transaction solely to reduce its debt. RCom will also enjoy 49% future economic upside from the towers business, based on certain conditions, it said in a statement.
Under the Term Sheet, the specified assets are intended to be transferred from Reliance Infratel Ltd. (RITL) on a going concern basis into a separate SPV, to be owned by Brookfield.
RCom will continue as an anchor tenant on the tower assets, under a long term MSA, for its integrated telecommunications business.
Both the parties expect considerable growth in tenancies based on increasing 4G offerings by all telecom operators, and the fast accelerating trends in data consumption, which are expected to contribute to significant growth in revenues and profitability for the towers business in the future.
RCom and Brookfield also see several opportunities for consolidation in the towers industry in India that will further enhance growth and value creation in the future.
The Anil Ambani-led telecom operator is finalizing its acquisition of Sistema’s Indian unit Sistema Shyam Teleservices Limited (SSTL) that operates under the MTS brand. It has already received nods from Bombay and Rajasthan High Courts, and is now awaiting a final nod from the telecom department (DoT).
Media reports said that the SSTL acquisition is expected to be closed by November 2016.
Furthermore, the telco is in the process of merging its wireless operations with Maxis-owned Aircel to create a new merged entity.